Legal Alert: Federal Court Greenlights Trump Anti-DEI Contract and Grant Certifications: This is Now Real!

OutSolve has invited John C. Fox, Esq. as a guest blogger providing legal insights on EEO and compliance issues. The views expressed in his posts are his and do not reflect the viewpoint of OutSolve or its employees.

Two Federal Agencies Are Already Demanding Certifications to Obtain Federal Contracts and Grants 

 What Is a Well-Intentioned Company to Do?  

There are at least five corporate options. The problem is that no-cost options are not particularly compelling, and the better options come with preparation and evaluation costs. 

• OPTION 1: Drop back ten yards and punt the federal contract or grant away by declining to sign? 
• OPTION 2: Sign the contract or grant… and hold your breath? 
• OPTION 3: Get someone else down the hall to sign the contract or grant so they can pay the financial penalty and go to jail, and not you, in case there is a problem with the certification that the U.S. Department of Justice believes violates 18 U.S.C. 1001 (which makes it a criminal and civil offense for an individual (meaning you, NOT the corporation) to make a false or knowingly misleading oral or written statement to a federal officer or agency). 
  • Sub-option 3B: Call in sick that day and text your boss reminding him/her that the federal contract/grant needs to be signed that day?  
• OPTION 4: Hire OutSolve to perform an objective audit of your corporate DEI practices (by whatever name) and run data-driven non-discrimination analyses to see if the results arouse any concerns among your company’s employment lawyers? 
• OPTION 5: Hire your favorite employment lawyer to render a legal opinion (under attorney-client privilege and subject to the Attorney Work Product Doctrine) after reviewing any potentially problematic corporate policies or practices that might give your company’s “designated artificial lamb” contract or grant signer the courage to thereafter sign the federal contract or grant on the table awaiting signature? 

Quick Background: How the Tables Turned So Quickly: 

1. 1. See Section (iv) A & B of EO 14173: 
      “(iv)   The head of each agency shall include in every contract or grant award:
      
      (A)  A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and
      
      (B)  A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” 

Please carefully note the language of paras A&B since that is the language contractors and grantees may soon be certifying.

1. On March 3, 2025, we covered Judge Abelson’s Preliminary Injunction here.  

3. On March 10, 2025, Judge Abelson expanded his Preliminary Injunction to all federal Executive Branch agencies (none of which were before the Court) by issuing a “Clarified Preliminary Injunction.”   

4. On March 14, 2025, a unanimous 3-Judge panel of the United States Court of Appeals for the Fourth Circuit (Richmond, VA), led by its Chief Judge, an early Obama appointee, and joined by a second Obama appointee, granted the federal government’s Motion to Stay the entirety of Judge Abelson’s Preliminary Injunction in addition to his Clarified Preliminary Injunction. 

• The case now proceeds to an eventual trial before Judge Abelson on the still pending underlying Complaint filed to start the lawsuit. 
• KEY POINT: In the meantime, the two contract/subcontract/grant certifications President Trump ordered on January 21, 2025, in Executive Order 14173 NOW HAVE GONE LIVE!  

5. The Horse Is Already Out of The Barn: Indeed, two federal agencies have already begun to require federal contract bidders and grant applicants to sign anti-DEI certifications of their own design as David Goldstein, Esq., an affirmative action attorney and his firm first reported: 

1. The Army and Air Force Exchanges have published the following new contract clause at Section 1-12 of their “Terms and Conditions.”
   “1-12. EQUAL EMPLOYMENT OPPORTUNITY
   1. Contractor will comply with applicable EEO Laws.
   2. In accordance with EO 14173, Contractor agrees that its compliance with all applicable Federal anti-discrimination laws is material to the Exchange’s payment decisions for purposes of 31 U.S.C. §3729(b)(4). Contractor certifies it does not operate any programs in violation of any applicable Federal anti-discrimination laws.”
2. (B) Similarly, the U.S. Department of State has published the following contract nondiscrimination certification language and instructions: 

NOTE: Both of these certification requirements are  curious for at least four reasons since they were: 

1. Not published for public Notice and Comment pursuant to the Administrative Procedure Act despite having a substantial impact on the regulated community, and 
2. The two agencies have used language different from the Executive Order and different from the other agency’s language to accomplish the same two certifications; 
3. There is no specificity as to what one is certifying and no instructions about what evaluation or investigation a contractor/grantee must undertake previous to certification (despite 67 pages of explanations and instructions as to all other contract requirements, for example, in the Exchanges’ “Terms and Conditions” manual) ; and  
4. Government-wide federal contracting provisions, like the anti-DEI certification President Trump has ordered up, have historically been the EXCLUSIVE province of “The Big Three” federal contracting agencies: The Department of Defense, NASA, and the Government Services Administration. This is because The Big Three are typically party to the largest dollar value contract and grant volumes each Fiscal Year.

Conclusion

Contractors are now in a difficult position to either "knuckle under" and sign the certification requirements at the military exchanges and at the State Department or walk away from signing the federal contract or grant. What do you value, what do you fear?  

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• Executive Order 11246: Affirmative Action Changes

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• Legal Alert: National Urban League v. Trump – What Employers Should Watch

• IN & OutSolve: What's Happening Around Rescission of EO 11246